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A budget for big business

Robert Peston | 13:29 UK time, Wednesday, 23 March 2011

Few I think could accuse George Osborne of going for easy vote-winning options in his measures aimed at stimulating the growth of the economy.

Cuts in the burden of corporation tax, which will be worth around £2bn per annum when implemented over the coming years, are likely to be particularly beneficial for big multinational companies.

And a significant lifting of planning constraints will delight much of the corporate sector.

The Chancellor George Osborne with the red budget box

But at a time when the residents of so-called middle Britain are feeling a sharp squeeze in disposable income, and when homeowners fear that screeching high speed trains will be zooming past their back gardens and ugly superstores will be built at the front, Mr Osborne's Budget choices may not win a vast number of votes.

The chancellor will therefore perhaps be seen as having chosen - still years from a general election - a principled Budget rather than a crowd-pleasing one. That may well be the best he can hope for, in any case.

In a way, The Plan for Growth published today alongside the Budget's red book, can be seen as a response to criticisms levelled at the government by Sir Richard Lambert when he stood down as director general of the CBI, the business lobby group, earlier this year.

Sir Richard praised the chancellor's determination to cut public spending, but said that "the government has not been nearly so consistent and focussed when it comes to policies that support growth" and had "failed so far to articulate in big picture terms its vision of what the UK economy might become under its stewardship".

So what is the vision of the chancellor and of the Business Secretary, Vince Cable? In that growth document, they say:

"We have to become much more productive so that we can be a leading high-tech, highly skilled economy. We must build a new model of economic growth - where instead of borrowing from the rest of the world we invest and we save and we export. Our economy must become more balanced. Private sector growth must take the place of government deficits and prosperity must be shared across all parts of the UK."

Most of that is as shocking and contentious as a mum pictured with a steaming apple pie.

So how is this high-exporting, high-saving, high-growth economy to be created? Well here are messrs Osborne's and Cable's quartet of ambitions, which they believe will deliver the UK's economic renewal:

1) to create the most competitive tax system in the G20 (or the 20 most powerful and richest world economies);

2) to make the UK one of the best places in Europe to start, finance and grow a business;

3) to encourage investment and exports as a route to a more balanced economy; and

4) to create a more educated workforce that is the most flexible in Europe.

And this is where it starts to get controversial.

Mr Osborne has decided to cut the mainstream rate of corporation tax rate by 2p in the pound from 1 April, double the planned cut. Which means the rate will go from 28p in the pound to 26p.

And this isn't just an acceleration of cuts announced last June. It represents an extra cut, because Mr Osborne's new commitment is to reduce the rate to 23% by 2014, rather than the 24% rate he announced last year.

That extra cut of 1p in the pound (or 1 percentage point) will cost £900m next year and thereafter. Which is a lot of money at a time when the government doesn't have a lot of money.

What's more, Mr Osborne will be seen as generous to companies in a second sense. After a lengthy review of the so-called Controlled Foreign Company rules, which are hated by most multinationals, the Treasury has opted to apply a very low rate of just 5.75% on cash held by multinationals in non-trading entities overseas.

By 2015/16, the low rate of tax on this cash - which is lower than the 8% rate which business had expected to be levied - will cost the exchequer £840m per annum compared with the current tax system. Again, that is a non-trivial sum. And critics will see it as rewarding multinationals who stash cash in tax havens and low-tax countries.

The Chancellor George Osborne

Finally, a further £80m a year of revenue will be lost by a decision not to levy tax on dividends brought into the UK from branches of multinationals - which the government would see as the logical extension of a decision by the previous chancellor, Alistair Darling, not to levy tax on dividends repatriated from overseas subsidiaries.

So in toto, big companies have arguably secured tax breaks which will eventually save them around £2bn a year - which some will see as the Tory members of the government unfairly rewarding their corporate pals, while millions of individuals are struggling to make ends meet.

Indeed critics of these changes to the global taxation of British multinationals believe the ultimate loss of revenue for the exchequer will be much greater than the Treasury's estimates.

Mr Osborne however would see the corporation tax cuts as a sprat - albeit a plump juicy sprat - to catch a lovely silver mackerel.

He would argue that the UK's long term growth and prosperity - on which the UK's ability to finance public spending depends - requires big companies to invest as much as possible in the UK. And he fears that if the tax regime for big companies isn't as competitive as anything on offer from other rich developed economies, those big companies will take their head offices and their investment to other parts of the world.

For Osborne, the reality of globalisation - where businesses can locate more-or-less wherever they like - means that the burden of taxation has to increasingly switch to income taxes on individuals and to indirect taxes like VAT.

So in that context it is significant that Mr Osborne is raising around £1bn from cracking down on what he calls disguised income, or tax loopholes exploited by the super-wealthy and those who run multinationals. The tax free status of offshore employee benefit trusts, for example, is being abolished, which will be a blow to the directors of big companies who are frequently the beneficiaries of such trusts.

There will also be a rise in the tariff imposed on non-doms, those who don't pay tax in the UK on their overseas income (which can be substantial) - though the tariff rise is coupled with incentives on non-doms to invest in the UK.

Or to put it another way, Mr Osborne hopes that if he is seen as being generous to big businesses as institutions, it will be recognised that he is simultaneously forcing the rich as individuals to make an increased contribution to closing the UK's fiscal deficit.

Mr Osborne is also acutely sensitive to the charge that the reductions to the burden of corporation tax will be perceived as too kind to the large banks, whose reckless lending and investing is widely blamed for the financial crisis that tipped the UK into the worst recession since the 1930s.

So he is marginally increasing from 0.075% to 0.078% the rate of the bank levy he has just introduced. That will boost the take from the levy by about £100m per annum.

The levy rise may dispel criticism that he is letting the banks off lightly. But the banks themselves may be miffed, because they may feel that the chancellor has gone back on his promise in their Project Merlin deal with him to bring greater stability and predictability to the tax system.

Finally there are a raft of reforms to planning and building regimes, which are bound to stir up a hornets' nest.

Business Secretary Vince Cable watches the Chancellor deliver the Budget

These include a new presumption that developments should be permitted, unless the local planning authority can advance compelling reasons why they should not - which inverts the current decision-making arrangement, where the developer has to argue the merits.

Also planning decisions must be made within a year. And local authorities can no longer favour brownfield sites over other more pristine sites (though the green belt will continue to be protected).

There'll be a lifting of all restrictions on small modifications and additions to existing developments, which will please big supermarket groups like Asda which argued for it, and it will be easier to change the use of existing buildings (from industrial to residential, for example).

Finally there will be a carrot for local authorities along with a stick, in that they may be given the ability to auction - for the benefit of council taxpayers - the planning permissions attached to parcels of land.

In the round, these planning changes could lead to a massive increase in developments, of both residential and commercial properties. They capture something the Treasury has believed for years, that the growth and competitiveness of the UK has been stifled by building restrictions.

With the corporation tax changes - and the recent pledge by Vince Cable to slash red tape - they represent a loosening of alleged shackles on the corporate sector.

They demonstrate the government's belief that the rehabilitation of the British economy can only come from the liberation of private enterprise - and perhaps also show that ministers have bought into the argument advanced by the influential consultancy firm, McKinsey, that much of the heavy lifting has to be done by the very biggest multinational companies.

All that said, at a time when millions of people are feeling a good deal poorer and are anxious about their job prospects, it is by no means certain that the allocation of precious resources to big business will be seen by all or even most voters as a manifestation of social justice.

Update 1416: One group of big companies won’t be pleased: the oil and gas companies.

They will pay an extra £1.8bn in tax this year and £2.24bn next year on their North Sea oil and gas production.

If the likes of Shell and BP don’t complain that this will undermine their efforts to squeeze the last drop of oil and gas out of the North Sea for the benefit of the UK, I will drink a litre of their finest unleaded petrol.

Also, it is not clear how the government can be sure that the oil companies won’t push up the pump price to recoup the extra tax - which would defeat the point of the exercise.

Finally, I may have given the chancellor too much of the benefit of the doubt in his determination to eschew populist pressures: abolishing the duty escalator on petrol won’t be seen as hairshirt fiscal conservatism.

Update 1725: One way in which some argue that George Osborne has failed the fiscal prudence test is in respect of the discount rate at which he has chosen to value the cost of future public-sector pension promises.

The analyst John Ralfe says that the chancellor’s decision to discount future pension payments at the rate of real or inflation-adjusted GDP growth understates the liability by a third – which translates into tens of billions of pounds of hidden liabilities.

By the way, in all the widespread confidence that we no longer face a sovereign debt crisis in the UK, it is often ignored that the UK still has to sell a colossal amount of gilts or government bonds to finance the deficit.

This year the Debt Management Office has been given a mandate to sell £169bn of gilts – which may yet turn out to be a colossal undertaking in a year when there is unlikely to be an extension of quantitative easing and the Bank of England is there unlikely to be a buyer of gilts.

Comments

Page 1 of 2

  • Comment number 1.

    All this user's posts have been removed.Why?

  • Comment number 2.

    Peston,

    Less of the Marxist rhetoric and more of the unbiased reporting please. Where do you think the wealth creation is going to start? in the public sector where nothing is created? No, with those of us who put our blood sweat and tears, as well as personal capital, into creating a better lives for ourselves our employees and the community around us.

  • Comment number 3.

    What is meant by "tax free status of offshore employee benefit trusts, for example, is being abolished"? Offshore EBTs already pay tax on UK source income. Does this mean they will be subject to UK CGT on gains?

  • Comment number 4.

    Bye bye small businesses - George has just ended your existance.

    Never mind we'll all be able to support our SME's with our 1p saved on a litre of petrol!

    Hurrah for the Bullingdon bell boys - their false forecasts, their experimental economics and all round idiocy has achieved it's goal.

    See you all on the 26th - "this is what democracy looks like"

  • Comment number 5.

    No huge surprises, but a good budget. Reducing corporation tax will be important, and it's good that NI will be merged with income tax - it makes no sense at all as it is.

  • Comment number 6.

    Spoken like a true state employee. I am sorry but is the raising of the massive increase in personal allowances not something that is good and very attractive for the average person? Is it not good to cut back the stupidly complex tax system that pulls in people on low incomes? The fact is that basic economics is that to pay for a state sector you have to make and sell things that provide the income. You just can't go on bloating the public sector without increasing the private industry that pays for it.

  • Comment number 7.

    "Finally, a further £80m a year of revenue will be lost by a decision not to levy tax on dividends brought into the UK from branches of multinationals - which the government would see as the logical extension of a decision by the previous chancellor, Alistair Darling, not to levy tax on dividends repatriated from overseas subsidiaries.

    So in toto, big companies have arguably secured tax breaks which will eventually save them around £2bn a year - which some will see as the Tory members of the government unfairly rewarding their corporate pals, while millions of individuals are struggling to make ends meet."

    Errrrr - isn't that what George Monbiot was saying?????

    Come on Robert - there's more at stake here than journalistic competitiveness.

  • Comment number 8.

    Paul Krugman blog 2011 March 21:

    "But in retrospect, it’s quite clear: Lucas and Sargent declared final victory over all things Keynesian in the 1970s, and the closed minds of their followers were such that they didn’t even notice the revival of Keynesianism that took place over the three decades that followed. And Brad is right: if you’ve reached the point where you don’t pay attention to anything that might disturb your orthodoxy, you’re not doing science, you’re not even pursuing a discipline. All you’re doing is perpetuating a smug, closed-minded sect."

  • Comment number 9.

    Interesting that BP shares went up approx 1% after the budget , even though they have been hit by a "Oil Gain Tax" ..

  • Comment number 10.

    Why doesn't anyone ever seem to remember small businesses? I'm sure it must be very nice for big businesses to have their corporation tax rate cut by 2%, but let's not forget that small businesses only get their rate cut by the 1% that had been previously announced.

    I wonder if the Chancellor's long term plan is to move to a single rate of corporation tax for all businesses, large and small?

  • Comment number 11.

    That's easy Bobby! Attract and retain businesses and they will employ people. Employees pay tax and stop claiming benefits - what's not to like?

  • Comment number 12.

    Plan .2B? The planning regs/law changes will be interesting because every council will now be on the defensive and in effect refusal becomes an appeal with all the resource implications that has. Lower growth but more borrowing sounds like the cuts are have a perverse effect - no surprise.

  • Comment number 13.

    2. At 13:48pm on 23rd Mar 2011, Buzzjack wrote:
    Peston,

    Less of the Marxist rhetoric and more of the unbiased reporting please.
    ------------------------------------------------------------------------------------------------------------------------------------------
    You are out of your box, my friend.

  • Comment number 14.

    Incentive, what incentive?

    Capital allowances were cut and abolished a few years back, why were they not reinstated today. A flat lower corporation tax rate over taxes companies who invest and under taxes companies who don't such as banks.

    How can they say they want industry to grow when this is no investment incentives for existing businesses?

    They chancellor is talking complete garbage. The more you know about tax, the more you realise this is total rubbish coming from the chancellors mouth.

  • Comment number 15.


    "For Osborne, the reality of globalisation - where businesses can locate more-or-less wherever they like - means that the burden of taxation has to increasingly switch to income taxes on individuals and to indirect taxes like VAT."

    Given that the problem we have at the present is a lack of demand due to inflation and over accumulation of wealth, its hard to picture where the growth will come from. In eality it wont return, and the proposals will re-enforce this.

  • Comment number 16.

    All this user's posts have been removed.Why?

  • Comment number 17.

    This budget is a kick in the teeth for the UK oil & gas industry. The Treasury will gain short-term revenue from the increase in Supplementary Charge, but lose out in the long-term as companies invest elsewhere in the world, where tax rates are lower and Governments resist the tempation to fiddle with rates.

  • Comment number 18.

    I wouldn't pass judgement immediately either way, need to digest it all for a few days (otherwise I'll just moan about some niggles).

    But what I would say is that this budget did actually sound self-consistent, coherent and considered ... not purely a list of data, nor blarney. So irrespective of one's political leanings I'd hope all major party politicians can learn a thing or two from this.

  • Comment number 19.

    After listening to Danny Alexander being interviewed I have concluded that we can save some money in public finances by making him redundant and replace him with a recording repeating "The disasterous finances the last government left us" - as I think he just broke a record for over-use of this phrase.

    ...and well done Robert for challenging him on the source of the fuel duty tax cut - we all know the energy companies will pass the levy onto the customers - as they ALWAYS do.

    I look forward to seeing how Danny Alexander is able to 'monitor' the energy companies for abuse of such charges - I mean it would be the first time in history a politician has achieved such a result - and you wouldn't think it from looking at him that he was a 'worlds first'

  • Comment number 20.

    2. At 13:48pm on 23rd Mar 2011, Buzzjack wrote:

    "Less of the Marxist rhetoric and more of the unbiased reporting please. Where do you think the wealth creation is going to start?"

    What surely you don't mean the 'regurgitation sector' where private enterprise regurgitates surplus value created by the worker? (the source of profit)

    "in the public sector where nothing is created?"

    ...no except the facilities to ensure there is an educated and healthy workforce to 'do stuff' - without which private enterprise might look a bit rubbish (or do you plan to run the factory on your lonesome?)

    "No, with those of us who put our blood sweat and tears, as well as personal capital, into creating a better lives for ourselves our employees and the community around us."

    Really? - I thought the motivation was self interested profit? - are you sure you're talking about economics?

    Consecutive government reductions in education funding have a lot to answer for - you are now a symptom of an 'uninvested society' and your lack of understanding of 'wealth' is a blistering sore of that symptom.

  • Comment number 21.

    Can you explain to me how reducing a tax for the person paying for fuel at the pump, and putting it instead on the company that filled up the pump in the first place is going to make petrol cheaper? Or have I got this wrong....

  • Comment number 22.

    The thing that bugs me most about this budget is that it panders to big business, and is a typical Tory budget. The people on the street hardly get a look-in apart from the measly 1p-cut in fuel duty. And taking £2bn from the oil companies direct?

    Oh yeah, they'll be so happy to not pass that cost along to the pumps...is this going to turn into a version of Government v Banks, whereby the Government shakes its fist at the companies whilst the companies still do whatever they feel like? That's what the banking levy felt like, banks sticking two fingers up at the people telling them not to be vulgar with bonuses.

    Oil companies will simply raise the at-pump price, and of course the Government won't mind as that will bring in more tax revenue from us poor souls who have to pay for petrol. That 1p cut doesn't look so saintly from where I'm sitting.

  • Comment number 23.

    11. At 14:09pm on 23rd Mar 2011, Lindsay_from_Hendon wrote:

    "That's easy Bobby! Attract and retain businesses and they will employ people. "

    Yeah - that's why president Bush's tax cuts only created 500,000 net jobs - we should follow his example!

    "Had the tax cuts actually resulted in the creation of millions of jobs and impressive economic growth, proponents of extending cuts for the top brackets might have some justification. But although tax cuts for the top were a central element of Mr Bush’s “trickle down” programme his approach generated unimpressive job growth, increased inequality, no gain in income for typical working-age families, and soaring deficits. Only 4.7m private-sector jobs were created from June 2001, when the principal Bush tax cuts were enacted, to the onset of the recession, and most of those were wiped out in the last year of the Bush presidency. Median income for working-age families was actually $2,100 lower in inflation-adjusted terms in 2007 than it had been in 2000. The federal balance sheet had turned, even before the economic downturn hit, from a healthy surplus to an ocean of red ink.

    Compare that to the 1990s, after taxes on high-earners were raised in both 1990 and 1993. The Clinton administration oversaw the creation of 21m private sector jobs, an $8,000 increase in median income for working-age families, a 34 per cent expansion of GDP and a federal budget that went from record deficits to the first surplus in 30 years and the promise of surpluses for years."

    [Unsuitable/Broken URL removed by Moderator]

    Am I right in thinking that the opposite of everything you say is correct?

  • Comment number 24.

    Ah yes. So McKinsey say that investment by multi-nationals are the key to growth.

    Tell that to Germany - the most successful exporting country on earth!

    Could McKinsey's views possibly be influenced, I wonder, by the fact that they don't work for exactly huge numbers of small and medium sized businesses?

    And if Boy George and Vince say:

    "We must build a new model of economic growth - where instead of borrowing from the rest of the world we invest and we save and we export".

    Well, how about not spending precious tax-payers money on subsidising corporate debt for a start!!!

    By phasing out the tax-deductibility of corporate interest payments, they really could create a 'save and invest' economy....


  • Comment number 25.

    Also, on this budget...I notice no mention of any rise in national minimum wage...are the Tories now looking at stagnating the NMW?

  • Comment number 26.

    Another damp squib from Osborne me thinks:( http://bit.ly/hPGKu7

  • Comment number 27.

    Terrible budget for small business. Abolishing tax reliefs' in order to create different schemes and then linking them to CPI. Paper shuffling at its finest. No growth strategy whatsoever.

    And then finally admitting that inflation is going to be greater than 5% for the whole year? And at the same time boasting that interest rates are low? What do you think the Bank of England is going to do? The rates have to go up by 1.5% this year or we will end up with hyperinflation! We are already in stagflation territory. The Bank of England has to deflate the housing market or maintaining the bubble of bad debt will mean we won't grow for another 50 years!

    Can we make it compulsory that the minimum qualification needed to be chancellor has to be a MBA from a top business school?

  • Comment number 28.

    Thanks for that completely one sided blog on the budget. Complete and utter tosh.

    "He would argue that the UK's long term growth and prosperity - on which the UK's ability to finance public spending depends - requires big companies to invest as much as possible in the UK."

    Who - exactly - would argue that any (none oil producing) country that want's more money needs to get that money from somewhere else? So it's either investment from business or wait for a world wide lottery and hope we win.

  • Comment number 29.

    I also want to register my annoyance at the section of the Finance Bill that cuts a large proportion of tax liability from multinational corporations with a base in the UK. All that's going to happen with that is that businesses will take their business outside of the UK whilst keeping a base here in order to dodge a good portion of corporation tax. Service industry will be decimated in this country by that portion of the announcement.

  • Comment number 30.

    If you disagree with this budget then you do not understand economics, if you do not understand economics...why are you posting here?

    If you want a Communist Manifesto I recommend the original.

  • Comment number 31.

    23. At 14:44pm on 23rd Mar 2011, writingsonthewall wrote:
    11. At 14:09pm on 23rd Mar 2011, Lindsay_from_Hendon wrote:

    "That's easy Bobby! Attract and retain businesses and they will employ people. "

    Yeah - that's why president Bush's tax cuts only created 500,000 net jobs - we should follow his example!

    ==========================================================

    500,000 new jobs sounds pretty good, 500,000 new employees paying income tax and other tax contributions, 500,000 less people hopefully on benefits........geez GB was a genius, we dont give him near enough credit.

    thanks for sharing that good news with us all

  • Comment number 32.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 33.

    I'm astounded.

    Planning, loosening corporate tax, tightening individual tax for the very wealthy, giving the bankers a quick bash, economic zones in the labour heartlands.

    One might disagree with their ideology and think it profoundly wrong, but assuming they believe it, which isn't unreasonable, this is the budget of a govt that doesn't seek re-election but seeks what it genuinely thinks is best for the country at the expense of it's peripheral and core voters interests and pockets.

    Add this to Libya, and we've got real leadership happening.

  • Comment number 34.

    25 Chizzle

    Increasing nmw is a sure fire way to make British companies even more uncompetitive than they are now. To get more money in low paid peoples' pockets they need to reduce the taxes as they are doing by increasing personal allowances. In a free market the nmw is the reason for companies moving abroad and paying immigrant workers less due mainly to the extortionate burden of NI on employers.

    Lowering taxes, simplifying taxes and reducing regulation is the best way of encouraging investment in Britain and job creation and this is the only way we will get out of the financial mire Labour left us in.

  • Comment number 35.

    "I wonder if the Chancellor's long term plan is to move to a single rate of corporation tax for all businesses, large and small?"

    I certainly hope so. Differential taxation just stops companies growing into large ones. It has no effect on investment and employment which are both tax deductible any way.

    The cut in corporation tax is a bung to the large companies again.

    A more appropriate policy would be to make the rate of corporation tax 35% and increase the offset allowed for investment. On a straight cash basis for example.

  • Comment number 36.

    Judging from the speech, (and we do know that the detail in the press releases are yet to be seen) you are right that its a budget for BIG business and their Non-Dom owners. Reduction in big company Corporation Tax but no mention of small company Corporation Tax. The biggest tax loophole of all - Non Dom left wide open for continued and massive abuse by all foreign born individuals. Bank Bonuses remaining lightly taxed.
    We're all in this together? - I think not! No - this Tory government and party is about every man for himself, true to form.

  • Comment number 37.

    Surely the tax on oil companies is the most clever aspect of the budget - it allows Osborne to cut fuel duty, because when the oil companies inevitably push the basic price of fuel, the corresponding vat rise will more than compensate. QED no change to tax revenues from fuel duty, but it makes Osborne sound generous. Very clever.

  • Comment number 38.

    What has Westminster done for us? We should have adopted the German route to manufacturing years ago. Reform management/worker relations and support investment in technology. Make the things the world wants, cars and machinery not arms and obscure financial instruments. In fact if we became a German Lander we could save a great deal of money and be better off in the long run.

  • Comment number 39.

    this is the stuff - finally a budget for enterprise after 13 years of new Labour centralist tinkering and ham fisted attempts at social engineering (all paid for with dollops of wodge siphoned off from hard working people).

    Particularly like the sound of the planning reg changes. I know of numerous examples of companies ploughing significant resources into buying land or property and obtaining planning consents, only to have the projects drag on for years due to interminable legal obsfucation by people with nothing better to do with their lives. Not sure about sticking it to the oil companies but given that the UK's fields remain one of the most predictable places in the world to actually extract oil, I expect they'll just have to grin and bear it.

  • Comment number 40.

    #23
    "
    http://www.ft.com/cms/s/0/41ed6e4c-afad-11df-b45b-00144feabdc0.html#axzz1HQxYE9l0

    Am I right in thinking that the opposite of everything you say is correct?
    "

    WOTW you quoting from left wing rags again!

  • Comment number 41.

    22. At 14:41pm on 23rd Mar 2011, Chizzle wrote:
    The thing that bugs me most about this budget is that it panders to big business, and is a typical Tory budget. The people on the street hardly get a look-in apart from the measly 1p-cut in fuel duty. And taking £2bn from the oil companies direct?

    Oh yeah, they'll be so happy to not pass that cost along to the pumps...is this going to turn into a version of Government v Banks, whereby the Government shakes its fist at the companies whilst the companies still do whatever they feel like? That's what the banking levy felt like, banks sticking two fingers up at the people telling them not to be vulgar with bonuses.

    Oil companies will simply raise the at-pump price, and of course the Government won't mind as that will bring in more tax revenue from us poor souls who have to pay for petrol. That 1p cut doesn't look so saintly from where I'm sitting.
    ...............
    Its almost as if more and more of us are figuring out that corporate business is running the show, making all the decisions, and fleecing us of every penny we earn in order to line their own pockets.

  • Comment number 42.

    The economy is fuelled by the general population buying items for their homes..yet the housing market is stagnated because it costs too much to move house...ie STAMP DUTY stops people moving, and spending money on their new homes...hence the economy slows down.....WHY therefore no incentive for the middle housing market by a reduction in stamp duty, or at least an experimental 1 year exemption from stamp duty to see that people will move and then spend money...that brings in other taxes, therafter.

    People in the middle housing market have equity, and savings...wheras first time buyers do not...I agree with giving first time buyers help, but in terms of fuelling growth and the economy...it is more important to incentivise the middle housing market, that leads to people with money to spend it...thereby creating a market for growth, thereby leading to greater manufacturing, thereby leading to more jobs.

  • Comment number 43.

    "30. At 15:01pm on 23rd Mar 2011, RelentlessForce wrote:
    If you disagree with this budget then you do not understand economics, if you do not understand economics...why are you posting here?

    If you want a Communist Manifesto I recommend the original."


    What a compelling argument...

  • Comment number 44.

    Growth, for lack of a better word, is good. Growth is right. Growth works.

    Growth clarifies, cuts through, and captures the essence of the evolutionary spirit.

    Growth, in all of its forms; growth for life, for money, for love, knowledge, has marked the upward surge of mankind.

    And growth, you mark my words, will not only save George Osborne, but that other malfunctioning corporation called the United Kingdom...

  • Comment number 45.

    Overal this looks like a good budget in line with what was reasonably expected and creating no new shocks in the markets.

    Those questioning the continued austerity measures should really have a look at what is happening in Portugal at present as there is a very real chance another bailout will be in place within a couple of weeks and the uncertainty that wold cause because of the worry it will fuel regarding a much larger economy in Spain could be increedibly painful for all of our european neighbours and we could have it a lot worse.

    When I hear Milliband or Balls speak I can't help but be incredibly grateful neither of those 2 are in charge of our finances as while Cameron and Osbourne have there issues they at least are looking to address issues rather than continuing with spending policies that helped lead us to where we are and backtracking on there own involvement in the deregulation of our Financial Services that equally nearly crippled the economy.

  • Comment number 46.

    27. At 14:52pm on 23rd Mar 2011, jenius99 wrote:

    "Can we make it compulsory that the minimum qualification needed to be chancellor has to be a MBA from a top business school?"

    oh no - that's the LAST thing we need. All those bankers who think they understand economics have MBA's and look where it got us!

    I would accept that maybe a minimum of GCSE maths might be reasonable - I think that would rule George out for the post I'm afraid!

    Maybe a better solution would be the chancellor must run his own small business - maybe 'number 11 corner shop' so there is some empathy with the SME's.....in fact lets move number 11 to Bradford too so our chancellor isn't just a southerner who has never seen any snow before and consequently blames the economic demise of the nation on "some white fluffy stuff falling from the sky"

  • Comment number 47.

    "Once upon a time in a village, a man announced to the villagers that he would buy monkeys for $10.

    The villagers seeing there were many monkeys around, went out to the forest and started catching them. The man bought thousands at $10, but, as the supply started to diminish, the villagers stopped their efforts. The man further announced that he would now buy at $20. This renewed the efforts of the villagers and they started catching monkeys again.
    Soon the supply diminished even further and people started going back to their farms. The offer rate increased to $25 and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it!

    The man now announced that he would buy monkeys at $50! However, since he had to go to the city on some business, his assistant would now act as buyer, on his behalf.

    In the absence of the man, the assistant told the villagers: 'Look at all these monkeys in the big cage that the man has collected. I will sell them to you at $35 and when he returns from the city, you can sell them back to him for $50.'

    The villagers squeezed together their savings and bought all the monkeys.
    Then they never saw the man or his assistant again, only monkeys everywhere! Welcome to WALL STREET."

  • Comment number 48.

    Buzzjack: How marxist is this. The public sector thankfully is not in the business of creating profit to line the pockets of you capitalists but what we do is draw blood sweat and tears to keep the communities healthy, housed, educated. We help the elderly, the disabled, the disaffected to live relatively good lives, in safety and help others to politely contribute to their communities and society. That is true wealth creation. We might not sit on piles of money but we enjoy the satisfaction of truly making a difference. Do you?

  • Comment number 49.

    The changes to personal allowances and higher rate thresholds mean that for taxable incomes from £35000 to £100,00 the marginal rate is 40%.From £100,000 to £114,950 it is 60% (because of the incremental withdrawal of personal allowance). It then falls again to 40% between £114,950 and £150,00 when it goes up to 50% for higher amounts. This is a bizarre way to organize a progressive tax system - but financial commentators seem not to have noticed.

  • Comment number 50.

    31. At 15:05pm on 23rd Mar 2011, avalanche-jersey wrote:

    "500,000 new jobs sounds pretty good, 500,000 new employees paying income tax and other tax contributions, 500,000 less people hopefully on benefits........geez GB was a genius, we dont give him near enough credit."

    With a population of 307 MILLION??????

    "thanks for sharing that good news with us all"

    I think you have just demonstrated "your level" to everyone here. Had you bothered to read all the way to the bottom you would have read that Bill Clinton created 21m private sector jobs (although it's not net, I believe net is about 19m)

    ...does this make Bill Clinton 'God' in your eyes then?

    No wonder the Governments get away with murder - look at the analysis going on.

    If you can only see absolute values then no wonder you're so scared of the deficit!

    Oh look - here's another one - fooled into thinking tax cuts create jobs!

    34. At 15:09pm on 23rd Mar 2011, juliet50 wrote:

    "Lowering taxes, simplifying taxes and reducing regulation is the best way of encouraging investment in Britain and job creation and this is the only way we will get out of the financial mire Labour left us in."

    Do sheep ever learn - or do they just follow the flock?

    Here we have a 'clever one'

    "30. At 15:01pm on 23rd Mar 2011, RelentlessForce wrote:

    If you disagree with this budget then you do not understand economics, if you do not understand economics...why are you posting here?"

    Do you even know what Ricardian equivalence is?
    Show me ANY evidence that tax cuts lead to long term jobs growth please - come on, Mr "I know economics" show us the colour of your musket with some evidence.

    ...or is evidence a step too far for you?

  • Comment number 51.

    "39. At 15:19pm on 23rd Mar 2011, a_sensible_comment wrote:
    Particularly like the sound of the planning reg changes. I know of numerous examples of companies ploughing significant resources into buying land or property and obtaining planning consents, only to have the projects drag on for years due to interminable legal obsfucation by people with nothing better to do with their lives. "
    Oh, you mean the democratically elected councillors who make all the decisions. Thats right, we dont want them getting in the way of big business do we. Hilter in Mein Kampf said that democracy inevitably leads to marxism. I guess I know where you stand.

  • Comment number 52.

    The tax rates on large companies, and wealthy individuals is largely irrelevant, because up there in the stratosphere, tax becomes entirely voluntary.

    Any business person will explain that they borrow (at low interest rates) to fund growth. This economy desperately needs to grow. But the chancellor is determined to slash borrowing. The result is a dramatic suppression of growth that is heading towards a recession.

    C.

  • Comment number 53.

    45. At 15:30pm on 23rd Mar 2011, RugbyRugbyRugby wrote:

    Those questioning the continued austerity measures should really have a look at what is happening in Portugal at present as there is a very real chance another bailout will be in place within a couple of weeks and the uncertainty that wold cause because of the worry it will fuel regarding a much larger economy in Spain could be increedibly painful for all of our european neighbours and we could have it a lot worse.
    ===========================

    It is austerity measures that has put Portugal on the brink of bailout, and Ireland before it. Dimwit.

  • Comment number 54.

    5. At 13:53pm on 23rd Mar 2011, Westmorlandia wrote:
    No huge surprises, but a good budget. Reducing corporation tax will be important, and it's good that NI will be merged with income tax - it makes no sense at all as it is.
    ____
    The question is what happens to state pension payouts for those who stop work for several years? At present you can top up missed national insurance payments, but if its linked to income tax who knows whats planned?

    When national insurance was first introduced it DID effectively pay for the welfare state. Now its just part of the pot, but merging the two taxes will be far more complex than just adding them together.

  • Comment number 55.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 56.

    #31 Avalanche read the rest of the post.

  • Comment number 57.

    37. At 15:13pm on 23rd Mar 2011, jonnym1 wrote:
    Surely the tax on oil companies is the most clever aspect of the budget - it allows Osborne to cut fuel duty, because when the oil companies inevitably push the basic price of fuel, the corresponding vat rise will more than compensate. QED no change to tax revenues from fuel duty, but it makes Osborne sound generous. Very clever.
    ___________________
    That was precisely my reading of the proposal too. He's going to earn MORE revenue this way than simply adding an extra 1p to the duty. "Brown's Stealth Taxes" were about as stealthy as a rampaging elephant. This one is so stealthy it should be bombing Libya!

  • Comment number 58.

    Afternoon Robert,
    Ah a budget for big businesses, so nothing in it for the working man then?
    Did you miss the by-line "UK to introduce a carbon price floor for the power sector"?
    This will cost consumers more billions in artificial taxes to encourage energy companies who are already making obscene profits for their foreign owned masters!

    The morals in the budget had nothing for me, alchol duty remains the same despite its abuse killing 10,000 people per year! Ah let's put up the price of cigarettes by another 50p per pack, "that will encourage them to quit". May I suggest that you make smoking illegal rather than pipmping off the taxes that this habit raises? At least that would be an honest stance to take.
    Petrol cheaper by 1p per litre....'till when? How long before oil reaches $250 a barrel? Then what you gonna do George?
    No, I'm afraid this was a non-budget, nothing to see, move along...

  • Comment number 59.

    50. At 15:41pm on 23rd Mar 2011, writingsonthewall wrote:

    With a population of 307 MILLION??????

    "thanks for sharing that good news with us all"

    I think you have just demonstrated "your level" to everyone here. Had you bothered to read all the way to the bottom you would have read that Bill Clinton created 21m private sector jobs (although it's not net, I believe net is about 19m)

    ==========================================================

    personally i think that creating even 1 new job would be good for us all. 500,000 new jobs then is pretty spectacular, if you can help get 500,000 people what is essentially a better life then yeah that quite special.....and BC really is a god if he got 19m.

    "No wonder the Governments get away with murder - look at the analysis going on.

    If you can only see absolute values then no wonder you're so scared of the deficit!"

    ===========================================================

    it wasnt any analysis, merely my opinion, i dont remember ever using the word analysis......if im wrong do prove it and point out that word in my previous comment.

    and finally, why would i be afraid of a deficit which doesnt exist, i mean the government of Jersey dont have one.

    If your so sure that all the current plans the government have then why dont you run for the job of prime minister, i mean at least then you wont be such a hypocrit.....how is anyone meant to take you seriously. you spend all day on the internet writing about how wrong and evil finance is and yet you work as a "business analyst" in multiple financial firms. your basically telling these companies how to be more successful.

    Maybe your name should be "writingonYOURwall" with maybe the signature for the end of all your pieces of "do as i say as what i do is the exact opposite"

  • Comment number 60.

    39. At 15:19pm on 23rd Mar 2011, a_sensible_comment wrote:

    "Particularly like the sound of the planning reg changes. I know of numerous examples of companies ploughing significant resources into buying land or property and obtaining planning consents, only to have the projects drag on for years due to interminable legal obsfucation by people with nothing better to do with their lives."

    Oh you mean people who have bought houses in nice areas who don't want their view spoiled by a new supermarket?

    Well you've shown the colours of your tribe - I wonder if you would feel the same when an application for a nuclear power plant is approved in your neck of the woods despite local opposition.

    Once again - you demonstrate that YOU are the most important thing to YOU.

  • Comment number 61.

    No cut on VAT that affects the poorest and lowest paid workers, on PAYE throughout the whole system of ordinary working people.

    Some people pay no fuel duty or VAT at all with access to red diesel if are classed the same as genuine farmers?

    What would happen if every PAYE employee decided to opt out of PAYE and became self-employed, as in America and many countries across Europe? That way all anonymous self employed fiddlers, currently running around in Britain, might have some competition?
    Sadly, HMRC can't cope even with the ghost of that idea? That's not how Britain runs is it?

    Everyone is entitled to become self-employed. Although as a medic, I would not do it, nor recommend it for professional integrity/training teams/continuity of care in hospital that is a culture that must encompass all ethical reasons.

    The next difficulty of NHS health provision - as Andrew Lansley destroys and drives it - is there are benefits to the NHS to employ all medics and nurses via private health companies on a 'just in time' basis. Therefore, if you thought there was no continuity of care now - you are in for a bigger shock.

    What this means is - if you, or your friend or relative are on a hospital ward right now - look around - can you tell the difference between agency or permanent NHS staff? I challenge you to see the difference! Or just give all NHS staff a bad name?

    It's time ALL agency/locum staff working in all areas of the NHS were required, legally, on their ID badges to declare their agency employer as a matter of urgency for patient safety and integrity of care!

    So if a member of staff approaches you in an NHS hospital or treats you in a GP surgery, with no NHS ID - then you are legally entitled to ask for the name of their employment agency - who will, no doubt, be charging three times the usual cost!

  • Comment number 62.

    ...and how did Clinton do that then? He reduced interest rates, reduced taxation, cut red tape and took a machete to the deficit. Sounds like a sensible bunch of policies in a recession.

  • Comment number 63.

    "These include a new presumption that developments should be permitted, unless the local planning authority can advance compelling reasons why they should not - which inverts the current decision-making arrangement, where the developer has to argue the merits.

    Also planning decisions must be made within a year. And local authorities can no longer favour brownfield sites over other more pristine sites"


    i probably find this most concerning. I foresee a number of issues here

    1. EU law, many sites are protected under EU habitats directive, UK Wildlife act etc. If the responsibility of Environmental Impact Assessments falls with local authorities rather than developers will they A, be motivated to carry out the necessary investigations, B be able to afford it.

    Under the current system a developer will hire a consultant such as ARUP or some other sizeable company at great cost (smaller developers may use a smaller consulant), to tell them whether/how they can develop the site without breaking EU law, or flooding legislation (some other stuff too such as landscape, noise pollution etc).

    This work is expensive. Will local authorities actually do it? Can they afford it? Presumably, since these reports can be what stops the development, they wont if the tories want to dramatically increase building. Are we then just going to ditch flooding policy and ignore EU law? In addition to this the consultancy industry could be damaged (or what the recession has left of it).

    Added to this is the obvious environmental damage that may be hard to sum up in direct fiscal terms per annum, but will impact recreation water quality, and if you believe in them environmental ethics...


    You could argue that planning restrictions exist for a reason other than to be evil and stiffle the uk economy.

    I guess we need more detail here really (considers reading budget). How far will this go? Will morrisons be able to build a new shop halfway up Scarfell Pike unless the local authority is willing to spend £XXXXXX on consultant fees (this is an extreme example but im making a point). Traditionally the local authority is also responsible for the final decision (although certain groups such as EA, national parks authority etc should be consulted). The decision being based upon the evidence the developer has provided, (and usually local politics). In theory (i could be wrong here so any readers feel free to correct me) the planning department/council can ignore any evidence or arguements against if they feel the development is in the greater public good. I guess local authories will save cash just by making uninformed decisions/ providing less information to the EA and other groups that may protest unless someone in the planning department or an council member is personally against the development.

  • Comment number 64.

    53. At 15:50pm on 23rd Mar 2011, Reticent_Trader wrote:

    "It is austerity measures that has put Portugal on the brink of bailout, and Ireland before it. Dimwit."

    Forgive them father - for they know not what they say....

    He probably read it in the paper this morning and was soooo pleased about getting through a whole sentence that he is destined to repeat it verbatim for the next week or so.

    I remember doing the same thing when I was 4 with "The cat sat on the mat" - I remember saying it for about 7 days I was so pleased with myself.

    Then I moved on to 'Where the wild things are'.

  • Comment number 65.

    54. At 15:53pm on 23rd Mar 2011, Peter_Sym wrote:
    5. At 13:53pm on 23rd Mar 2011, Westmorlandia wrote:
    No huge surprises, but a good budget. Reducing corporation tax will be important, and it's good that NI will be merged with income tax - it makes no sense at all as it is.
    ____
    The question is what happens to state pension payouts for those who stop work for several years?
    ===========================

    The main question is what happens to pensioners who are liable only for income tax as they have already paid in their NI?

    Other than that, NI is particularly regeressive and should be brought into line with income tax bands.

  • Comment number 66.

    I see Robert Peston finally got around to noticing the oil and gas tax changes. But UK oil and gas isn't all Shell and BP, or even ConocoPhillips and BG - what about the Talismans and the Tullows and the myriad small explorers out there, along with the Wood Groups and the Petrofacs who serve them. Marginal tax at the highest rate will now be 81%. UK oil and gas employs 380k people a year and accounts for one-fifth of UK annual investment. "Budget for growth"?!

  • Comment number 67.

    So the road transport lobby has seen off the fuel tax escalator for the second time.

    It is a pity that the government did not reduce the impact of fuel price increases on the cost of using road transport by reducing road tax, instead of reducing fuel tax. Road tax is the same for a vehicle that covers 1000 miles a year as it is for one which does 100,000. One might have expected the "greenest government ever" to justify this description by switching motor taxation from road tax to fuel tax.

  • Comment number 68.

    A cut in income tax for the poorest and a cut in fuel duty. And an increase in the bank levy and in tax of oil companies.

    Nothing for the average man here then, all pro-business...

    This is remarkably one-sided reporting from the BBC's business editor.

  • Comment number 69.

    This budget is good for business, thus in my eyes its good for us the workers, more jobs, more investment. A credible effort, I'd hate to have had to endure what labour would have done.

  • Comment number 70.

    Crikey - not again? Did the mean, relentless and cleverly under the radar, Douglas Alexander, write this Budget along with the Emergency one too?

  • Comment number 71.

    53. At 15:50pm on 23rd Mar 2011, Reticent_Trader wrote:

    It is austerity measures that has put Portugal on the brink of bailout, and Ireland before it. Dimwit.
    ----------------------------------------------------------------------------

    Actually its not at all is it though the issue relates to the goiverments inability to get through measures that are required to rpevent baiolout on account of them failing to act swiftly enough and therefore those measures now required are so severe the revolt against them has led opposition parties to turn against them in the face of public anger.

    In doing so they are really being mor ethan a little self serving as they will undoubtedly come to power and the measures proposed will likely be forced through as a result of the conditions attached to the bail out leaving the current opposition "blame free". Portugal will still face incredibly tough austerity measures they will just be forced upon them by a different group.

    Maybe you should learn to read a little around the subject you are commenting on in furture although clearly accepting the truth in this instance would somewhat undermine what your stance on the measures being taken and this goverment. So I get why you would want to play ignorant.

  • Comment number 72.

    Still no money for affordable rented property. There will be twenty five grand interest free loans for young people to get in a heap load of debt with the banks for over priced houses, that's something I suppose, but you can't blame the 'young en's' for wanting to pull stumps and head overseas. We need more affordable rented homes.... It's the only way forward.

  • Comment number 73.

    64. At 16:15pm on 23rd Mar 2011, writingsonthewall wrote:

    I remember doing the same thing when I was 4 with "The cat sat on the mat" - I remember saying it for about 7 days I was so pleased with myself.

    ===========================================================

    and now you have managed to progress to repeating the phrase "WERE NEVER GOING TO GET IT BACK"......your mother must be soooo proud you being able to write

  • Comment number 74.

    16. At 14:21pm on 23rd Mar 2011, burnallmoney wrote:
    Did anyone else notice Danny Alexander's masonic hand signal on BBC2's live budget analysis prog?

    No did not notice it what did it look like?

  • Comment number 75.

    39. At 15:19pm on 23rd Mar 2011, a_sensible_comment wrote:

    "Particularly like the sound of the planning reg changes. I know of numerous examples of companies ploughing significant resources into buying land or property and obtaining planning consents, only to have the projects drag on for years due to interminable legal obsfucation by people with nothing better to do with their lives."
    Those would be the deomcratically elected members then.

  • Comment number 76.

    44. At 15:29pm on 23rd Mar 2011, rock_and_roll_economics wrote:
    Growth, for lack of a better word, is good. Growth is right. Growth works.

    Growth clarifies, cuts through, and captures the essence of the evolutionary spirit.

    Growth, in all of its forms; growth for life, for money, for love, knowledge, has marked the upward surge of mankind.

    And growth, you mark my words, will not only save George Osborne, but that other malfunctioning corporation called the United Kingdom...

    .........

    And growth in a world of finite resource is er, not sustainable.

  • Comment number 77.

    Post Script. Retract my comment on Douglas Alexander writing any budgets for George Osborne, Chancellor.

    What I meant to say - is DANNY Alexander writing Budgets for the Chancellor? Apologies.

  • Comment number 78.

    71. At 16:27pm on 23rd Mar 2011, RugbyRugbyRugby wrote:
    53. At 15:50pm on 23rd Mar 2011, Reticent_Trader wrote:

    It is austerity measures that has put Portugal on the brink of bailout, and Ireland before it. Dimwit.
    ----------------------------------------------------------------------------

    Actually its not at all is it though the issue relates to the goiverments inability to get through measures that are required to rpevent baiolout on account of them failing to act swiftly enough and therefore those measures now required are so severe the revolt against them has led opposition parties to turn against them in the face of public anger.

    In doing so they are really being mor ethan a little self serving as they will undoubtedly come to power and the measures proposed will likely be forced through as a result of the conditions attached to the bail out leaving the current opposition "blame free". Portugal will still face incredibly tough austerity measures they will just be forced upon them by a different group.

    Maybe you should learn to read a little around the subject you are commenting on in furture although clearly accepting the truth in this instance would somewhat undermine what your stance on the measures being taken and this goverment. So I get why you would want to play ignorant.

    ..............

    Ireland made cuts very quickly but still it made no difference. Cuts mean more unemployed, less agregate demand in the economy, which means less tax receipts, which means more cuts, which means.........

    Cuts will simply lead to a death spiral in the economy. As is happening in Greece and Ireland. The debt cannot be repaid. The only solution is to default on the debt, or introduce monetary reform, and more away from debt based monetary systems. The alternative is a slippery slope to revolution.

  • Comment number 79.

    59. At 16:06pm on 23rd Mar 2011, avalanche-jersey wrote:

    "If your so sure that all the current plans the government have then why dont you run for the job of prime minister,"

    ....oh that's a classic - maybe it's because I believe the job of prime minister is going to be redundant very soon?

    "i mean at least then you wont be such a hypocrit.....how is anyone meant to take you seriously. you spend all day on the internet writing about how wrong and evil finance is and yet you work as a "business analyst" in multiple financial firms. your basically telling these companies how to be more successful."

    No I'm not - I'm helping these companies understand HOW MUCH RISK THEY'RE TAKING - however (and this may or may not surprise you) - valued opinions on risk are quickly ignored when a banker smells some EASY MONEY.

    "Maybe your name should be "writingonYOURwall" with maybe the signature for the end of all your pieces of "do as i say as what i do is the exact opposite""

    You tries that line before and I carefully showed you why that was nonsense.

    I should be taking the attitude of "I'm alright jack" as I am possibly the only person on this blog to have had a 10% PAY RISE this year......however there is this niggling little noise in the back of my head which whispers "this is wrong....people are suffering" - I think it's my conscience.

    ...that's why I am on here trying to explain how finance actually works from the inside so the 'idolisers' who make assumptions about people who work in finance being "all that" are set straight.

    I mean some of the sycophantic nonsense I read on here has nothing to do with reality in finance, I am not surprised that the system crashed and the banks didn't see it - not this time and I won't be surprised next time.

    This is true division of labour in the extreme - the guy on the FX desk has no idea the consequences of his actions - merely the bottom line at the end of the day.

    ...in the same way you applaud banks making money again - but don't consider how that profit came about - and who is actually generating it....and of course the consequences of it being syphoned off.

    That's the lesson over with today - not that you take any of it in - you spend half your time trying to discredit me rather than actually reading what I am saying.

    It's definitely true - tell someone something bad they already know and they will thank you for it - tell them something bad they don't and they will get angry with you and try to discredit you.

  • Comment number 80.

    71. At 16:27pm on 23rd Mar 2011, RugbyRugbyRugby wrote:
    Actually its not at all is it though the issue relates to the goiverments inability to get through measures that are required to rpevent baiolout on account of them failing to act swiftly enough and therefore those measures now required are so severe the revolt against them has led opposition parties to turn against them in the face of public anger.
    ========================

    I am struggling to figure out what you are trying to say but it seems to be that the governments in question were too slow to implement austerity?

    I can assure you that that certainly was not the case with Ireland which as early as spring 2009 starting cutting public sector salaries and welfare.

  • Comment number 81.

    62. At 16:11pm on 23rd Mar 2011, BSOTW wrote:

    "...and how did Clinton do that then? He reduced interest rates, reduced taxation, cut red tape and took a machete to the deficit. Sounds like a sensible bunch of policies in a recession."

    He SPENT not CUT - the deficit was REDUCED through ECONOMIC GROWTH.

    P.s. 'cutting red tape' is simply a fiction of politics designed to keep the sheepeeple in their pens - just like "efficiency savings" - what it actually means is DO NOTHING.

    Removing red tape causes problems - despite what your news feed tell your bereaucrats don't sit in offices 'thinking up red tape' to make life hell. Red tape is introduced AFTER and EVENT which demands it.

    For example, extra safety 'red tape' for rail maintenence workers to prevent another 'Potters bar' - or would you rather the train passengers were all "caveat Emptour" and should know the risks before boarding????

  • Comment number 82.

    Countries with lower Corporation Tax rates include such powerhouses such as Ireland (one of the lowest), Iceland, Chile, Hungary and Greece. Countries with higher rates include those such as the US, Japan and Germany.

    Now, which is more important in developing a strong economy, supporting enterprise and providing a healthy university-educated workforce (no matter what you think of supporting the NHS or tuition fees), or low corporation tax rates in a desperate attempt to please global companies who threaten to move jobs away at the drop of a hat?

  • Comment number 83.

    #71. At 16:27pm on 23rd Mar 2011, RugbyRugbyRugby

    The Greek ecenomy has gone into freefall FOLLOWING austerity measures imposed by themselves, the ECB and IMF. Fact.

    Ditto Ireland

    Ditto Portugal (soon)

    Ditto Spain (soon)

    The root cause may have been bursting asset bubbles not the austerity but be clear, the forced austerity is the cause of the death spiral in these countries to appease the markets. The real cause of the PIIGS crisis was the free market and a serious dose of the runs precipitated by overfed speculators.

  • Comment number 84.

    Curious occasion to mention planning law, I'd have thought that was a local government/environment etc. matter really.

    We've already some of the laxest planning regs in Europe, perhaps why much of the UK looks such a disgrace, and we get no visitors to large swathes of the land. I thought there already *was* a presumption in favour of development. I can only assume this means even less power for objectors, to preserve that which is dear to them, if it stands in the way of commercialisation.

    Perhaps its a sop to the Tory voters, up in arms about the reclassification of their gardens (which they hoped to get rich by building upon) as Greenfield land. (They could have voted Prescott back in instead, though...).

  • Comment number 85.

    68. At 16:23pm on 23rd Mar 2011, Andrew wrote:

    "A cut in income tax for the poorest and a cut in fuel duty. And an increase in the bank levy and in tax of oil companies."

    I sincerely hope you're not real.
    Well if you try to sum up the budget in less than 80 characters - how can you expect to be right?

    A cut in income tax for the poorest - WRONG - an increase in the personal allowance affects EVERYBODY (or didn't you know that?)

    "cut in fuel duty." - Yes, the 1p cut should offset the 20p rise this year....oh and the decision to jack up oil prices by a Lybian exploit should mean that cut had gone before the chancellor finished his speech!

    "And an increase in the bank levy" - to OFFSET the CORPORATION TAX CUT - do you know what OFFSET means?

    "and in tax of oil companies." - which will be paid by......?

    Oh dear - on budget day all the trolls are out to support their king. What a shame they have to 'pass the brain cell around' in order to each make a comment!

    I sincerely hope you're not real.

  • Comment number 86.

    73. At 16:27pm on 23rd Mar 2011, avalanche-jersey wrote:

    "and now you have managed to progress to repeating the phrase "WERE NEVER GOING TO GET IT BACK"......your mother must be soooo proud you being able to write"

    This is typing - not writing.

    80. At 16:58pm on 23rd Mar 2011, Reticent_Trader wrote:

    That post made me laugh - you say AUSTERITY - he say AUSTERITY!

    Didn't he actually prove the point you were making and then claim it for himself?

    Classic on Peston's blog

  • Comment number 87.

    41. At 15:24pm on 23rd Mar 2011, Averagejoe wrote:
    ..Its almost as if more and more of us are figuring out that corporate business is running the show, making all the decisions, and fleecing us of every penny we earn in order to line their own pockets.
    ---------------------------------------------------

    It has always been this way and always will be this way.

    Just do everything you can to avoid them.

  • Comment number 88.

    A Budget whose main aim is to help for Thunderbird Puppet George to dance to his Wealth Decimating City friends' tunes. A buffoon who has never done a real day's job in his life.

    And screw the small businesses, screw the workers - those who have jobs, screw the students and those who want to study.

  • Comment number 89.

    I am afraid I can't see a high growth, high value, quality manufacturing economy coming from all this. All I can see is more for corporate Britain whether it be the Big Government and Big Business and a long dry stick for the rest of us.

    I can appreciate that Osborne has very limited options so has to throstle around to look as though something is being done but this is far from being a budget for growth. Rather it is a budget for an indebted state.

    Once there is a supermarket on every street corner; what happens then?

  • Comment number 90.

    The Chancellor clearly has limited room to maneouvre due to the massive deficit he inherited (much as Labour supporters hate to keep hearing it). However, to create jobs companies need to feel they can invest, expand and take on more staff, so the cut in Corporation Tax is to be welcomed. In the long-term this will end up paying for itself as revenues go up as companies become more profitable. The fuel duty stabiliser is a good move, especially since the oil companies who benefit from higher oil prices will pay for it. If they start passing this on to the consumer then the Chancellor can threaten them with permanently higher taxes instead of letting the taxes slides when the oil price drops. The smart thing is it costs the Treasury nothing while maintaining tax receipts. The increase in personal allowance is also very welcome, especially for those at the bottom end of the earnings scale. It may not sound much to some people, but it is significant enough at that end. It also allows people to keep some more of the money they've earned rather than having Gordon decide when and how to give it them back in the form of "tax credits". He also sounded the beginnings of a reform of our tax system, which is badly needed.

    Milli-Balls reply was not bad on rhetoric but very low on any kind of substance. Their answer to everything is always more of the "spend now, pay later" culture that dominates Labour's economic thinking. I'm sure it will go down well with the crowds for now (although maybe not Marxist enough for WOTW), but it will do nothing to enhance the long-term future of this country. At least Osbourne has the balls to deal with being unpopular while he takes these decisions. Milliband just has Balls.

  • Comment number 91.

    A budget for big, global and most able big business!

    'So how is this high-exporting, high-saving, high-growth economy to be created? Well here are messrs Osborne's and Cable's quartet of ambitions, which they believe will deliver the UK's economic renewal:

    1) to create the most competitive tax system in the G20 (or the 20 most powerful and richest world economies);

    ............. we already have the most competitive tax system in the G20 ... as it is so easy for big business to avoid paying UK tax by having subsidiaries in foreign countries

    2) to make the UK one of the best places in Europe to start, finance and grow a business;

    ................ This is already the case for the big tax avoiding, British worker avoiding global businesses

    3) to encourage investment and exports as a route to a more balanced economy; and

    ............... foreigners already own what they need/have taken overseas what isn't cemented to the floor ... they have already bought out what they want and taken it overseas!

    4) to create a more educated workforce that is the most flexible in Europe.

    .............. a noble cause ... but a long term aim that shows very little progress at the moment

    'For Osborne, the reality of globalisation - where businesses can locate more-or-less wherever they like - means that the burden of taxation has to increasingly switch to income taxes on individuals and to indirect taxes like VAT.'

    We already have the highest taxes in the world ... and most larger businesses are VAT registered and can avoid paying most VAT.

    ........................

    The good news is that we have a govt that is serious about tackling the UK budget debts and deficits and which Labour would have botched and bungled like everything else ... but the budget is overall, a bit disappointing and is an opportunity missed.

    I particularly disliked the way George Osborne failed to slash VAT because of EU red tape ... if that legal problem is genuine then it needs to be tackled as a major priority issue.

    VAT is a major issue for millions of ordinary people in the Uk and non-VAT registered small and other businesses in the UK.

    If the budget was intended to be pro business ... then it certainly was pro big business and not pro small business because of the VAT scandal. The rate of corporation tax is also irrelevent when so many big businesses find it so easy to avoid anyway by having overseas operations.

    My view is that the budget although steadfast and competent is not going to avoid the political turmoil as the domestic UK economy remains stalled for all but the global most able ... who don't need any extra help in any case.

  • Comment number 92.

    Saturday the 26th. I can't wait!

  • Comment number 93.

    "46. At 15:31pm on 23rd Mar 2011, writingsonthewall wrote:
    27. At 14:52pm on 23rd Mar 2011, jenius99 wrote:

    "Can we make it compulsory that the minimum qualification needed to be chancellor has to be a MBA from a top business school?"

    oh no - that's the LAST thing we need. All those bankers who think they understand economics have MBA's and look where it got us!

    I would accept that maybe a minimum of GCSE maths might be reasonable - I think that would rule George out for the post I'm afraid!

    Maybe a better solution would be the chancellor must run his own small business - maybe 'number 11 corner shop' so there is some empathy with the SME's.....in fact lets move number 11 to Bradford too so our chancellor isn't just a southerner who has never seen any snow before and consequently blames the economic demise of the nation on "some white fluffy stuff falling from the sky"

    "

    Whether its snow or volcano ash...

  • Comment number 94.

    WOTW - (re. comment 85) - I am real! I just pinched myself to make sure and it still hurts a bit.

    All of the points you make in response to mine are broadly fair (although I'd note that the cut in personal allowance doesn't help the very richest - and you're being a bit pedantic saying that I'm 'wrong' saying there's been a cut in income tax for the poorest, as I didn't say that it was exclusively for the poorest, which would indeed be incorrect). I wasn't trying to give a full and balanced take on the budget by any means.

    My point was just that the BBC business editor, given his position, ought to give a more balanced view of the budget than boldly asserting that it is pro-business and anti-voter, which I think is too close to being party political.

  • Comment number 95.

    I think it's a fair budget given that attracting and incentivising business and industry is our best way of getting people back into work and the UK getting out of the economic doldrums - particularly if life can be breathed into our manufacturing industry. For once the emphasis is away from private individuals stumping up ever more sums of cash for the government. A cautious well done to George Osborne.

  • Comment number 96.

    Labour supporters have to get real like your policiticans. The coalition cannot just wave a magic wand overnight and fix the utter mess that has been inherited. It is a slow process and there will be tough choices to make. Labour couldn't do an average job with money in the bank, why they think they could when the coffers are empty is beyond me.

    We have to stimulate the businesses as if they don't grow there is no prospect of recovery. Jumping on the anti-corporate bandwagon is a very naive way of thinking. If business don't grow, who puts money in your pocket and/or gives you a job?

    Granted the way the banks have been dealt with is not to my liking but it's such a delicate subject. They need to find a way of making them lend more.

  • Comment number 97.

    Plenty of talk about the big oil companies - we are a small operator producing oil onshore with fairly tight margins - we employ local guys to run the show. We also pay local oil rates making our tax burden close to 70%. This compares poorly to the tax take in our French and Romanian projects of 19-35%. UK oil, one of the last big proper businesses in the UK, will just go elsewhere. Nuclear will be more of a necessity when we rely on other country's oil and gas. Oil is an easy target, but this is poorly thought through.

  • Comment number 98.

    79. At 16:54pm on 23rd Mar 2011, writingsonthewall wrote:

    I should be taking the attitude of "I'm alright jack" as I am possibly the only person on this blog to have had a 10% PAY RISE this year......however there is this niggling little noise in the back of my head which whispers "this is wrong....people are suffering" - I think it's my conscience.

    ...that's why I am on here trying to explain how finance actually works from the inside so the 'idolisers' who make assumptions about people who work in finance being "all that" are set straight.

    ==============================================================

    but its still hipocritcal to have taken any pay rise, i mean you said yourself that your job is to tell firms about the level of risk they are taking (and im guessing get the to reduce it). surely the global crisis we just had which centred around the firms taking all this risk shows that (if you were doing this job more than 3 years ago) your not doing your job very well so surely shouldnt be getting any kind of pay rise.

    --------------------------------------------------------------------------------

    This is true division of labour in the extreme - the guy on the FX desk has no idea the consequences of his actions - merely the bottom line at the end of the day.

    ...in the same way you applaud banks making money again - but don't consider how that profit came about - and who is actually generating it....and of course the consequences of it being syphoned off.

    ==============================================================

    but how is that any different to buying a ham sandwich, i mean buying that sandwich has directly helped those who murder innocent animals. should all butchers be rounded up and put on trial for genocide. please tell me your a vegitarian otherwise im gonna have to brin out that H-word that you hate.

    and how about petrol, im taking it then that you only ever cycle or walk to places as using any form of petrol powered transport would directly be helping those firms which pollute entire oceans with their spills and they support evil dictators in the middle east.

    and i dont suppose really that you use any kind of product powered by the mains electricity, i mean think of all the people and plants and animals which are effected by pollutants and climate change.

    so before you complain about the guy on the FX desk not worrying about what global effect his USD/GBP trade will have go and sell your car/motorbike, hook all your electricity sockets up to a wind turbine and some solar panels and go on a salad diet otherwise im gonna have to drop the H-bomb

  • Comment number 99.

    If anything, it is now clear that the annual budget is about as important to public sector expenditure and broader economic management as the FA Cup is to the financial well being of Premier League Football.

    Now this budget is out of the way, we can at least get back to grips with the key issues of how to make swingeing cuts in undeservedly high public sector pensions, a non-productive public sector work force, and the ridiculously high benefits payments to people who are just plain lazy parasites.

  • Comment number 100.

    Of course this was predominantly a budget that favours big corporations as that has been the recovery policy from the word go even when nu labour (not so lite) was in power and used the same false premise of the trickle down effect. This was firstly writ large by Gordon Brown in that whilst he was determined to save the banks at all costs, the nationalized bank the 'public?' fully owned, the Northern Rock - repossessed the homes of poor people at a faster rate than any other bank. Then comes quantitative easing.

    The link below gives a fair view of the BOE's naive trickle down assumptions.

    http://www.bankofengland.co.uk/monetarypolicy/pdf/qe-pamphlet.pdf

    Bear in mind that the BOE is talking of inventing and then injecting £200 billion into 'the economy' - in these circumstances the fact that this document is strewn with so many mights and coulds and possiblies and general wishful thinking - is rather disconcerting.

    Interesting in this document is that the BOE states it will not be buying assets from the Banks. One presumes that this is because the BOE thought the banks had received enough in the way of bail-outs anyway and the move would be unpopular. The real reason however is that the BOE was only interested in one thing and that was buying up UK government debt and the banks held only about 1% of gilts so the BOE couldn't have bought from the banks even if they had wanted to.

    Next you need to see the first installment of how the BOE applied quantitative easing for no better reason than if you go to the table A of expenditure you will see that the BOE cannot carry out even GCSE level mathematics.

    http://www.bankofengland.co.uk/publications/other/markets/apf/apfquarterlyreport0904.pdf

    It is somewhat glaring that the subtotals do not add up. 0 + 0 + 4 does not equal 5. This error is repeated throughout the totals although the actual total could be presumed to be correct.

    Lastly one needs to see where the money was actually spent and on what and the graph that illustrates the 'breakdown' is pretty hilarious.

    http://www.bankofengland.co.uk/publications/other/markets/apf/apfquarterlyreport1101.pdf

    There is a note below the Chart 1 which states in very small print "(a) Data based on settled transactions. Note that bars for categories other than gilts are very small."

    They certainly weren't kidding there, firstly I thought it was just a dodgy image with a few rogue pixels at the bottom. Basically what the graph and Table A illustrate is that by the end of QE the BOE had spent almost £200 billion of which £198+ (99.5%) billion was gilts (government debt) and a mere £1.4 billion (0.5%) on corporate bonds.

    Interesting that the BOE don't publish who they bought gilts off. However there is a figure for the end of 2010 publised by the DMO that indicates that of all the total holders of gilts - pensions and insurance companies reduced their holdings from 60% percent of the total to 30% and that banks increased their holding to about 8% (it is assumed they did this by borrowing at 0.5 percent to buy gilts with an automatic yield of 3.5%).


    Did any of this this money trickle down? Why should it? These companies are in the investment business not charity. Basically the money both here and in the US has gone into stocks and commodity investments because that's how these institutions make money. In effect all that has been created is a stock market and commodity bubble that will eventually have to be corrected. As commodities have risen because of the sheer amount of printed dollars and pounds chasing investment opportunities then the result has been predictable inflationary. In so far as this is true then the BOE and the FED have actually helped to bring about the inflation they are charged to control and also have stoked the unrest in Africa and the Middle East.

    What of SMEs or the poor? They have received no assistance at all until today's penny off fuel tax. However lets not celebrate this paltry sum as no-one has explained how this new fuel stabilizer is actually going to work. If it is to maintain fuel at a 'stable' price, then one could assume that this means whilst it might not rise too much (what happens if crude reaches $300 a barre thoughl) - then equally maybe it will not fall again now either - in which case all they have really done is peg the price and their tax take at its current high.

    How the treasury and BOE can invest £200 billion so badly and no-one but the elite prosper should be a matter of fraudulent investigation. If all of this weren't enough big corporations and banks (as sponsors of all governments) are to get even more tax breaks if they just maybe create a 1000 apprenticeships or promise not to move their jobs abroad. Dream on.

 

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